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Communist Laos threw open its doors to tourism in 1999 and it wasn't long before a quiet river town called Vang Vieng was completely transformed by a wave of backpackers getting drunk and floating down the river in tractor inner tubes. Tubing as the whole thing became known fast became a central part of the tourist experience. But for now according to the Laos government, the whole business has gotten out of hand and leading to scores of deaths including two Australians earlier this year. As David O'Shea reports, they are shutting down the party.

REPORTER: David O'Shea

The party in Vang Vieng is over. Not long ago this area was teaming with young foreigners.

MR KOH, LAOS TOURISM: Every day have about 200 or 300 people in the restaurants.

REPORTER: Drinking and partying?

MR KOH: Yes.

REPORTER: Yes. Now nothing.

MR KOH: Closed already.

Mr Koh from the tourism authority has been watching the crackdown closely.

MR KOH (Translation): So many tragic events have happened in the past, they drink then they get drunk and fall unconscious. So the government thought it necessary to close down the restaurants near the river.

The bars, rope swings, jumping platforms and flying foxes that used to line the banks are all gone, as are the thousands of backpackers who once descended on this sleepy town to party like there was no tomorrow. At its height only a few months ago the scene on the river was extraordinary. In riverside bars dotted alongside the tubing route the young crowd left their cares behind and much of it was fuelled with free shots of local rice whiskey.

TOURIST: They give whiskey out for free and send you off like a 10-foot jump - real smart!

Some of the contraptions were dangerous, even for the sober. None would have passed any stringent safety tests, and injuries were common.

TOURIST: Coughed up a little bit of blood. Trying to wash it down.

Despite the backpacker bravado many lives have been lost here. Just this year two Australians died within the space of a month. The Laos government decided it was time to act. This is all that's left of the infamous big slide which stretched out over the river. The crackdown has dealt a blow to both the party animals and to the businesses that grew up to service them. Now there is only a trickle of customers at the tube rental shop.

GIRL: It's a bit devastating because we planned to come here and have an (Beep) amazing time. Excuse my French.

Backpackers are still coming for the tubing and still managing to find a drink on the river but Vang Vieng is a whole lot quieter than it used to be.

MAN: Two months ago this place was a den of iniquity, 18 to 20-year-old backpackers from Oz, New Zealand, Europe, crazy.

REPORTER: You have obviously had a few today as well.

MAN: Today - Shit, I have been drinking since (Beep) 10.

MAN 2: Now it's safer and not as much fun but it's more relaxing. You don't need to get too drunk.

Even though it's low season the economic knock on effect of the crackdown is already severe. Business owners are worried about the future, but because no-one really knows what the government has in mind they are reluctant to speak on camera.

REPORTER: It's a problem?

MR KOH: A big problem for Vang Vieng now.

REPORTER: For businesses?

MR KOH: Yeah, yeah.

REPORTER: Many people worry?

MR KOH: Yes, many people worry, all people.

SENESAK PHABMISAL, TOURISM AUTHORITY (Translation): They did not comply with their licences, therefore they broke the tourism regulations.

The deputy head of Vang Vieng's tourism authority places the blame squarely on the owners of the bars along the river for serving drugs and alcohol.

SENESAK PHABMISAL (Translation): They are not being responsible so it is our duty as a government to shut them down.

REPORTER: So who is suffering at the moment?

STEVE SAMPSON: Most people are.

Steve Sampson has watched Vang Vieng go from boom to bust. The Perth native has run the Aussie Bar in the middle of town for more four years. He is frustrated at the government's heavy handed response.

STEVE SAMPSON: Last year they could have stopped half the deaths if they brought in control, which they didn't. If they used their brains and controlled it then we would have no problems here and all of the Laos people would be happy because we're making money. There are a lot of rich Laos people here now.

These tourism trainees would much rather the focus was on more enlightening holiday pursuits.

WOMAN (Translation): They don't respect the culture of our town, therefore, as students who want to work in tourism we want to teach them our culture. We must preserve our culture.

Buddhism is central to life in Laos.

MONK (Translation): A lot of them come, not knowing about our culture. As for clothing and behaviour, there are many different types. Foreigners are not the same as Lao people. Lao women wear long skirts and many other things. For foreigners, it's hard to say;. Regarding their clothing, sometimes it is not appropriate.

One of the concerns here is clearly the influence of backpacker morality on the local youth. There were signs around town asking tourists to dress modestly.

GIRL: Thank you. Have a look. Well, what do you think about that? It's hot. In the water? No, come on. I genuinely believe that they don't mind.

The social impact of a wave of hedonists descending on this traditional and conservative place has been so dramatic people now come here to study it. I meet an anthropology student who agrees to talk as long as he remains anonymous.

STUDENT: I have seen people having sex on the tubes down the river while on the banks of the river are crowded with little local kids. I have seen very recently just a few days ago a guy walking without any shorts or anything down there. He was showing everything to everyone.

He has been seriously threatened once before for asking too many questions about the dark side of Vang Vieng.

STUDENT: The drugs are brought to the bars by the police most of the time or by intermediaries. And then the drugs will be sold to tourists.

He is not the only one who tells me the police play a role in the drug trade that's fuelled the Vang Vieng party. That's why the restaurants were able to spell it out so clearly on their menu.

MAN: I have been amazed by that.

One night an Australian man tells me he had just been caught by police smoking marijuana with a group of friends. It cost them $600 each to stay out of jail. Today's annual boatrace is a chance for Vang Vieng locals to put their concerns aside for the day. It's no wonder the foreign hedonists fit in here. The Laos people certainly know how to throw a drunken party. But the excitement of the race and these festivities aside, some say their town has already lost its mojo.

YOUNG WOMAN (Translation): It's not fun like it normally is, since they closed t he bars it's not fun anymore.

GIRL 2: I would definitely still come and tube down the river for fun or kayack.

REPORTER: So there is no reason for tourists not to come here now?

GIRL 2: No. If you really want to drink you can grab a couple of beers and do it a bit more sensibly.

TOURIST: Last night was good, the night before was brilliant.

REPORTER: What do the locals think?

TOURIST: They love it. Everyone is so happy here all the time.

MR KOH (Translation): And now for the future, if we have good control of the restaurants and guest houses and tourist areas, this will strengthen tourism for ever.

Steve at the Aussie Bar is optimistic too, that Vang Vieng will return to its former glory as party central.

STEVE SAMPSON: I would say give it another two months and it will be back to 80% what it was last year. Probably another year's time it will go back and probably get bigger and bigger.

REPORTER: The only deference being the swings and slides and some of the objecting success on the river will be a bit calmer?

STEVE SAMPSON: Yeah. Once they control it properly the tourists will come back.

MARK DAVIS: It looks like a stand-off could be coming between the Laotian communists and backpackers. I'm not sure who I would be backing.